Which of the following statements is true if the variable cost per unit increases while the sale price per unit and total fixed costs remain constant?
A) The breakeven point decreases.
B) The contribution margin increases.
C) The breakeven point remains the same.
D) The breakeven point increases.

Question

Quizplus · Accepted Answer

If the variable cost per unit increases, the breakeven point will increase since it will take more units sold to cover the fixed costs and variable costs per unit. The contribution margin will decrease since the sale price remains constant while the variable cost per unit increases. Therefore, the only true statement is that the breakeven point increases.

Which of the Following Statements Is True If the Variable